Innovation in the oil and gas industries, as measured by the
number of patent filings, is increasing worldwide. As
reported by Thomson Reuters, from 2012 to 2013 the number of patent
applications filed worldwide increased by a whopping
one-third. ("Unconventional energy boom drives oil and
gas patents to record" (Thomson Reuters))
See below for a caveat. Thomson Reuters attributes the
increasing IP filings to the oil industry's expansion into
less-established forms of oil and gas extraction, such as hydraulic
The oil and gas patent filings in the U.S. went up 18 percent in
2013. Much of the increasing patenting occurs in China, where
roughly 60 percent of new patent applications are filed. The
recent growth in Chinese industry has led to a greater demand for
energy, and China's filings have surpassed those of the U.S. to
take over the top spot in international filings in the industry,
according to the report.
The numbers reflect an increasing investment in intellectual
property in the oil and gas industries, but the conclusions based
on the numbers require some explaining because of the heavy effect
of Chinese patent numbers. First, the Chinese government
subsidizes patent application filing in several ways, which results
in more patents of dubious value. A recent study found that
Chinese applicants break up inventions into small bites for the
purpose of filing multiple applications on one invention to
increase subsidies (Z. Lei, Z. Sun, B. Wright, "Patent subsidy and patent filing in
China"). Second, a large majority of Chinese patent
applications are low quality "utility models," rather
than patents on inventions, as in the U.S. and Europe.
Without the eye-popping patent numbers from China, the numbers
still increase, just not in a hockey stick.
Further, it is unclear how Thomson Reuters obtained data for
2013 because patent applications remain secret for 18 months in
nearly all countries. The numbers might reflect official
reports from patent offices around the world, which tend to be
But the above questions about the data do not affect the overall
conclusion: increased investment in IP in the oil and gas
industries is clear and the surge of patenting in China is
This post was coauthored by Dmitry Dymarsky (BakerHostetler 2014
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